Supreme Court Decision Empowers Small Businesses to Challenge Regulations

The National Federation of Independent Business (NFIB) celebrates the U.S. Supreme Court decision in Corner Post, Inc. v. Board of Governors of the Federal Reserve System. This case addresses a critical issue regarding when the six-year statute of limitations to challenge an agency rule under the Administrative Procedure Act (APA) begins.

“Small business owners shouldn’t be denied the right to challenge government regulations, and we’re glad to see the Supreme Court agrees,” said Beth Milito, Executive Director of NFIB’s Small Business Legal Center. “Unreasonable government regulations are consistently a top issue for small business owners and today’s decision will allow owners to challenge them as they see fit. NFIB applauds the Court for reversing the judgment of the Eighth Circuit and correcting the majority rule.”

Case Background: Corner Post, Inc. v. Board of Governors of the Federal Reserve System

Corner Post, Inc., a small business, challenged a regulation issued by the Board of Governors of the Federal Reserve System. The regulation in question involved compliance requirements that Corner Post claimed were excessively burdensome for small businesses. The case centered on the interpretation of when the statute of limitations for challenging an agency rule under the APA should start. The Federal Reserve argued that the statute of limitations began when the rule was published, while Corner Post contended that it should start when the business was formed and became subject to the regulation.

The Supreme Court’s ruling clarifies this point, ensuring that businesses can challenge regulations within six years of being subjected to them, rather than from the date of the rule’s publication. This decision is crucial for newly-formed businesses that were not in existence when the original rule was published but later found themselves burdened by it.

NFIB, alongside the Restaurant Law Center, the Buckeye Institute, and the Manhattan Institute, filed an amicus brief supporting Corner Post. The brief argued that the publication of a final agency rule cannot injure entities that do not yet exist. It further stated that newly formed entities are not injured by an agency’s final rule until they are operational and subject to the rule’s requirements. The Supreme Court agreed, holding that the injury and finality requirements for suing under the APA are distinct, thereby allowing newly formed businesses to challenge regulations within a reasonable timeframe after they begin operations.

Implications for Small Business Owners

The Supreme Court’s decision has significant implications for small business owners. It ensures that they retain the right to challenge unreasonable regulations, which can often impose substantial compliance costs and operational burdens. By allowing challenges to be brought within six years of a business being subject to a rule rather than from the rule’s publication date, the decision provides greater flexibility and protection for small businesses.

“Unreasonable government regulations are consistently a top issue for small business owners and today’s decision will allow owners to challenge them as they see fit,” Milito emphasized. This ruling acknowledges the practical realities faced by small businesses and prevents them from being unfairly restricted by a rigid statute of limitations framework.

The NFIB Small Business Legal Center continues to protect the rights of small business owners in courts nationwide. Currently active in more than 40 cases in federal and state courts, as well as in the U.S. Supreme Court, NFIB remains committed to advocating for a fair regulatory environment that allows small businesses to thrive without undue interference.

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